PEEKSKILL, N.Y. ‒ Moody's Investors Service has affirmed its Aa2 rating on Peekskill's $57.4 million in bonded debt and revised its outlook to negative.
"The negative outlook reflects the city's pressured finances as a result of increased health, pension, and labor costs, including one-time labor expenditures, which have narrowed the city's cash reserves and fund balance," Moody's said Friday in a news release.
"Future rating reviews will consider management's ability to address these rising costs while maintaining adequate financial flexibility in line with internal policies and long-term structural balance."
Moody's cited the newly enacted property tax cap, which limits levy increases to 2 percent, or the rate of inflation, and said risks associated with the cap would remain unchanged and that it did not foresee making a rating distinction between debt subject and not subject to the cap.
The report said the city could raise its rating by achieving consistent structural operating balance in the operating budget and replenishing its general fund. The report also listed failure to achieve structural balance in the operating budget, further deterioration of reserves and ongoing tax certioraris against the city as factors that could further downgrade the city's debt. A tax certiorari is the process by which a taxpayer seeks to lower an assessment.